That's "price to earnings ratio, and the nomenclature here is a 10. Not like Bo Derek in the '80s, but rather the nod that the company being valued is trading at 10 times its earnings.
What year's earnings? Well, most quote trailing 4 quarters, or this current year's earnings. So if the company was trading at $12 and it had earned $1.20 in its last 4 quarters, then it'd be a 10 P/E.
So...is 10 good? Bad? Ugly? Answer: bad. Probably bad, anyway. If all the earnings were cash, i.e. little depreciation or amortzation from heavy capex, then it would imply a "cash dividend" of 10%, a huge number in today's world. The average S&P 500 company has like 2% in yield and trades in the 20x's in the modern era. So for something to be trading at only 10 times, it means that the Street either believes its earnings are going down...or that there is just generally something wrong with this company, its industry, or something else...bad.
Related or Semi-related Video
Finance: What is a value investor?1 Views
Finance allah shmoop what is a value investor Well of
value investors and investor who buy stocks that she believes
have quote hidden unquote value That little wall street just
isn't appreciating So uh aren't all investors value investors Well
kind of yes And really no value investor Generally speaking
in this context waits until a stock with good core
assets stumbles The company falls on short term hard times
and maybe quote should unquote traded twenty bucks a share
But wall street was angry and disappointed and hurt that
the company grew revenues only seven percent instead of the
expected fifteen percent for a quarter to and the streets
sold down the stock from eighteen to seven Well the
proverbial baby is thrown out with the bathwater And well
at this point the value investor steps in and buys
the stock big They hold the stock it's a tte
seven box The company slowly fixes itself in the stock
price gradually creeps upward back to that eighteen figure And
then the value investor likely sells the stock when it
goes from cheap to being fairly priced like you know
back in that eighteen twenty dollars target price kind of
thing Yeah that's where it was supposed to be earlier
all else being equal Well the normal cycle would then
have the value investors sell those shares to a growth
or mo mentum investor Who's credo is more like buy
high sell higher versus the you know value investor who's
all about by low then sell when fairly price that's
like benji graham Look him up it's not a sexy
but you can make big bank in value Land just
asked that one billionaire who loves all you can eat 00:01:40.498 --> [endTime] restaurants Yeah what's his name again
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